The resignation of Sir Keir Starmer has fired the starting gun on the race to be in charge of the UK's finances, with Andy Burnham, the newly elected Makerfield MP, almost certain to be the next prime minister. It is expected he will want a new chancellor to replace Rachel Reeves, and the bookmakers' strong favourite for the number two job is Ed Miliband.
Miliband, the former Labour party leader, is politically closer to Burnham than other rivals, a quality that Paul Johnson, former director of the Institute for Fiscal Studies, sees as a positive. “You really don't want people in Number 10 and Number 11 having very different views,” Johnson said. However, opinions are divided on whether Miliband would win the backing of financial markets. Nick Macpherson, the former permanent secretary at the Treasury, told the Financial Times: “The key to gaining the confidence of the markets is to articulate, implement and deliver a coherent strategy. Miliband is one of the few cabinet members with the intellect, experience, and authority to do that.”
“Ed Miliband is bookmakers' favourite to become chancellor as Andy Burnham prepares to be prime minister.”
Others view Miliband as an inflation risk, blaming his drive for net zero as energy secretary for the UK's high energy prices. Analysts say that reputation, accurate or not, could affect how bond markets react to his chancellorship. Lord Richard Walker, the boss of Iceland and the government's cost-of-living tsar, warned Miliband would be “a disaster” in the role, saying he had been “far too ideological” about tackling climate change and that his policies were “putting unfair pressure on households... in a very regressive way”. Sharon Graham, head of the Unite union, called Miliband as chancellor a “noose around the neck” of job creation because of his opposition to new oil and gas drilling in the North Sea. However, the TSSA union backs Miliband, with the Labour-affiliated rail union saying he would take a “different approach” to “delivering an economy that works for everyone”.
Another contender is Wes Streeting, a former contender for the Labour leadership, who was an early favourite for chancellor. There are suggestions he could be awarded the job for backing Burnham and withdrawing his own ambitions. The new chancellor will face a daunting in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran.
Meanwhile, the Royal Navy has scrapped frigate plans to focus on drone warfare, a move that comes as Burnham, the likely next prime minister, commits to a forthcoming military spending plan. The decision underscores the tough choices awaiting the next government as it balances defence needs against fiscal constraints.